The Polish zloty lost some ground on Tuesday due to verbal interventions made by both the prime minister Kazimierz Marcinkiewicz and MPC representative Dariusz Filar. The market opened at 3.7634 EUR/PLN and 3.1277 USD/PLN and since then the Polish currency was in the weakening mode. This market trend was triggered by the prime minister’s morning statement that he was concerned by the strength of the zloty and had discussed this issue with the new finance minister Zyta Gilowska. Zloty retreats from its 3.5-year high Later in the day the PM declared that Ministry of Finance would take steps to curb the strength of the currency, but such moves wouldn’t be radical. It sent the zloty to the daily lows of 3.7930 EUR/PLN and 3.1497 USD/PLN. He also informed that FinMin last sold the currency on the FX market on 6th of December 2005. ariusz Filar from the MPC commented that the zloty’s strength confirmed NBP worries over FinMin forex sales, that from his perspective had distorted free float. Filar said that zloty at 3.95-4.00 against the euro is acceptable for exporters which is consistent with results of the last business climate surveys made by the central bank. Till the end of the session the currency recovered some of the losses.
Without any domestic economic releas es scheduled for today the market will look to politics and the eurodolar movements for an inspiration. Having given current strength of the zloty further verbal interventions seem to be quite probable. However, from our perspective they may only have little and temporary impact on the marked, if they are no backed by the real interventions, that under today’s circumstances are generally unlikely.
(CSOB - Investment research)